January economic figures set stage for successful year

(VEN) - Vietnam achieved a high growth rate in January 2018, setting the stage for the country to achieve the economic targets set for the year.

Exceeding the plan

On January 1, the government issued a resolution (01/NQ-CP) setting out the major tasks and measures that require implementation for the sake of socioeconomic development and the state budget estimates for 2018. Ministries, sectors and localities, in turn, issued relevant documents to implement the resolution.

As reported at the regular government meeting, the Nikkei Vietnam Manufacturing Purchasing Managers’ Index (PMI) in the first month of this year rose in January to 53.4 from 52.5 in December. This is the highest PMI level since April 2017, the highest level in the 10-nation ASEAN bloc (which was ranked at 50.2) and even higher than the Nikkei Index of the Republic of Korea and China. These figures reflect the high confidence of Vietnamese consumers and society as a whole.

The nation’s index of industrial production (IIP) jumped 20.9 percent against the same period in 2017. The General Statistics Office (GSO) attributed the impressive IIP growth to the fact that domestic firms have concentrated on producing goods to meet increasing demand for the Lunar New Year holidays. This year the holiday begins in mid-February, whereas last year it started in late January. The manufacturing and processing sector posted the strongest IIP growth in January of 23.8 percent.

The central city of Da Nang took the lead among localities in terms of IIP growth in January with 49 percent, followed by Bac Ninh and Hai Phong with 47.2 percent and 31.3 percent. Ho Chi Minh City and Hanoi recorded IIP increases of 15 percent and 14.7 percent, respectively.

In addition to IIP growth, agricultural production was stable, while aquaculture output saw a year-on-year growth of 4.1 percent in January.

Total retail sales of goods and services increased 9.5 percent against the same period last year. Excluding inflationary factors, real growth in purchasing power stood at 8.38 percent. In addition, the consumer price index (CPI) in January rose 0.51 percent compared to the previous month and 2.65 percent compared to the same month last year. The foreign exchange market remained stable in January 2018, while interest rates were on a decline. Foreign direct investment (FDI) attraction dropped in the first month, while its disbursement increased by more than 10 percent compared to the same month last year.

The total number of newly registered companies and companies that resumed operations in January reached more than 15,400. Total realized investment capital under the state budget in January increased 13.9 percent against the same period in 2017, while realized FDI capital in January 2018 rose 10.5 percent compared to January 2017. Export turnover in the first month reached US$19 billion, an increase of 33.1 percent compared to a year ago. Meanwhile, import turnover stood at US$19.3 billion, a year-on-year increase of 47.4 percent.

Maintaining macroeconomic stability

The positive January figures form a promising basis for achieving the 2018 economic targets. The government aims to place Vietnam among the top four ASEAN nations in terms of competitiveness and business environment by the end of 2018.

To achieve this ambitious goal, the government is striving to maintain macroeconomic stability, control inflation, improve the business and investment environment, and promote rapid and sustainable economic growth. Similar to last year’s original target, the government will try to achieve a 6.7 percent GDP growth in 2018 and keep CPI growth below four percent.

Exchange rates will be adjusted in line with the macro balance, inflation and the monetary market. In addition, commercial banks are trying to bring down interest rates.

The targets also include tighter financial discipline in managing the budget by restricting the purchase of public-use cars and expensive equipment, and minimizing the number of conferences, festivals, meetings and overseas business trips.

The resolution also asks all ministries and state agencies to improve management and make efficient use of public assets and public debts, as the government aims to keep public debt at 63.9 percent of its GDP, with government debt comprising 52.5 percent of the total, and foreign debt 47.6 percent.

The resolution also encourages stronger state management, supervision of public investment, prevention of corruption and waste, and rectifies the inadequacies in public-private partnership projects, especially BOT projects.

The government also aims to achieve 8-10 percent growth in trade turnover compared to 2017, which saw record-breaking exports, and maintain a trade deficit below three percent.

Administrative reforms will also be a priority. These include cutting red tape for business and investment activities by 50 percent. Dialogue with private businesses will be held regularly to receive feedback.